Custom Truck One Source Revenue Reaches $495.2 Million, Raises 2026 Rental Outlook
Key Facts
Custom Truck One Source reported third-quarter revenue of $495.2 million for the period ended September 30, 2026, up $13.2 million, or 2.7%, from the same period last year, while rental revenue rose 20.1%, according to a company statement published via Business Wire. Revenue was below the analyst average estimate of $516.6 million, with analysts expecting annual growth of 7.2%, according to data cited by Reuters via Investing.com. Second-quarter revenue was $563.4 million, up 10.2% year over year, meaning revenue declined sequentially in the third quarter. By contrast, the results showed stronger growth in rental activity than in total revenue. The company posted net income of $2.3 million, an improvement of $8.1 million from the third quarter of 2025.
Adjusted EBITDA was $110.9 million, up $15 million, or 15.6%, year over year, and its margin widened by about 250 basis points to 22.4%, the company said. The improvement coincided with the average value of rental equipment reaching a record $1.39 billion, up $132.2 million, or 10.5%, from the year-earlier quarter. Rental fleet utilization reached 81.5%, while the return on rental equipment value was 39.4%. These indicators reflect an expanding rental equipment base and higher utilization during the quarter, alongside growth in rental revenue. The strength of the power transmission and distribution market had emerged in second-quarter results as a driver of rental activity, with the company linking its long-term opportunities to investment in data centers, electricity, grid modernization and infrastructure.
The company raised its 2026 revenue outlook for the Specialty Equipment Rental segment to a range of $870 million to $890 million, from $850 million to $875 million previously. It also raised its adjusted EBITDA outlook to $447.5 million–$460 million, compared with the previous range of $437.5 million–$455 million. The company said the adjusted EBITDA outlook revision marked the third increase during the year. In August, it had raised its 2026 consolidated revenue outlook to $2.1–$2.2 billion, before revising the rental segment revenue outlook again in an October announcement. The latest update puts rental growth at the forefront of the outlook revision, while the company kept its segment and adjusted EBITDA ranges separate from its consolidated revenue outlook.
The company also raised its 2026 estimate for net investment in the rental fleet to $210–$230 million and said levered free cash flow is expected to be slightly positive. It said the largest earnings impact from new fleet additions will be concentrated in 2027. The higher projected spending comes alongside an increase in the rental segment revenue range, while the largest earnings impact from additions is delayed until next year. In its second-quarter results, the company reported that net leverage had fallen to 3.85 times at quarter-end, from 4.02 times at the end of the first quarter and 4.31 times at the end of 2025. The STEM equipment sales backlog at the end of the second quarter was also $322 million, equivalent to about 3.5 months of new third-party equipment sales, below the target range of four to six months.
The company said more than $20 million in third-party STEM equipment deliveries shifted from the third quarter to the fourth, and that the delayed units remain in the backlog and are expected to be delivered in the fourth quarter. Reports cited by Investing.com attributed the delay to a hailstorm at the company's Kansas City facility and a warranty recall by a supplier. The company had said the delays reduced third-quarter sales by more than $20 million. The shift in deliveries represents a timing factor in the quarter's results, with the units expected to be delivered in the following period. The company is scheduled to discuss its third-quarter results on a call on October 27, 2026, at 9:00 a.m. Eastern time.
Before the results, analysts had expected earnings of about one cent per share and revenue of $516.6 million; the earnings-per-share estimate is not directly comparable with reported net income. Reuters reported that five of six analysts rated the stock Buy, versus one Hold, with an average price target of $13.33. It said the stock had fallen 25% from early summer through October 26. After the results were announced, the stock fell 0.1% in after-hours trading, according to Investing.com, which said revenue came in 4.1% below the average estimate of $516.58 million. The quarter therefore presented a mixed picture, with rental growth and adjusted earnings on one side and total revenue falling short of market estimates on the other.